Trade setup for February 20: Top 15 things to know before the opening bell

Nifty Trade Setup

Bulls showed healthy strength, taking the benchmark Nifty 50 beyond 23,000, but failed to counter the bear's attack, which wiped out all intraday gains. As a result, the index closed with a marginal loss amid a rangebound session on February 19. The index continued to take support at 22,800 and formed a higher highs-higher lows formation on the daily charts, although the overall sentiment remains bearish. According to experts, the index may attempt to climb above 23,000 again in the upcoming sessions. Above that, 23,200-23,500 (20-day and 50-day EMA) are likely to be key hurdles. However, below 23,000, consolidation may continue, with the key support zone being 22,800-22,700.

Here are 15 data points we have collated to help you spot profitable trades:

1) Key Levels For The Nifty 50 (22,933)

Resistance based on pivot points: 23,022, 23,078, and 23,168

Support based on pivot points: 22,843, 22,787, and 22,697

Special Formation: The Nifty 50 formed a bullish candle with an upper shadow on the daily charts, indicating selling pressure at higher levels, and continued its higher highs-higher lows formation for another session. However, the overall trend is still in favour of the bears, as the index is trading below all key moving averages (10, 20, 50, 100, and 200-day EMAs) with a negative bias in momentum indicators.

2) Key Levels For The Bank Nifty (49,570)

Resistance based on pivot points: 49,649, 49,843, and 50,158

Support based on pivot points: 49,019, 48,825, and 48,510

Resistance based on Fibonacci retracement: 50,374, 51,155

Support based on Fibonacci retracement: 47,866, 46,078

Special Formation: The Bank Nifty strongly outperformed the benchmark Nifty 50, rising 1 percent to climb above the 49,500 mark. The index formed a long bullish candle, resembling a bullish engulfing candlestick pattern (though not a classical one) on the daily timeframe. It also climbed above the 10 and 20-day EMAs and entered the upper band of Bollinger Bands, which is a positive sign.

3) Nifty Call Options Data

According to the weekly options data, the maximum Call open interest was seen at the 23,500 strike (with 1.15 crore contracts). This level can act as a key resistance for the Nifty in the short term. It was followed by the 23,100 strike (92.39 lakh contracts) and the 23,400 strike (80.58 lakh contracts).

Maximum Call writing was observed at the 23,100 strike, which saw an addition of 38.43 lakh contracts, followed by the 23,400 and 23,500 strikes, which added 23.99 lakh and 23.02 lakh contracts, respectively. The maximum Call unwinding was seen at the 23,800 strike, which shed 25.82 lakh contracts, followed by the 24,000 and 23,700 strikes, which shed 15.47 lakh and 15.09 lakh contracts, respectively.

4) Nifty Put Options Data

On the Put side, the 22,500 strike holds the maximum Put open interest (with 81.02 lakh contracts), which can act as a key support level for the Nifty. It was followed by the 22,000 strike (80.43 lakh contracts) and the 22,800 strike (69.91 lakh contracts).

The maximum Put writing was placed at the 22,800 strike, which saw an addition of 21.16 lakh contracts, followed by the 22,500 and 22,100 strikes, which added 19.58 lakh and 16.82 lakh contracts, respectively. The maximum Put unwinding was seen at the 21,900 strike, which shed 23.93 lakh contracts, followed by the 22,700 and 22,200 strikes, which shed 18.33 lakh and 18.12 lakh contracts, respectively.

5) Bank Nifty Call Options Data

According to the monthly options data, the 51,000 strike holds the maximum Call open interest, with 19.48 lakh contracts. This can act as a key resistance level for the index in the short term. It was followed by the 50,000 strike (12.12 lakh contracts) and the 51,500 strike (12.09 lakh contracts).

Maximum Call writing was visible at the 49,600 strike (with the addition of 68,790 contracts), followed by the 48,600 strike (54,000 contracts) and the 48,300 strike (29,970 contracts). The maximum Call unwinding was seen at the 50,000 strike, which shed 2.27 lakh contracts, followed by the 49,000 and 49,200 strikes, which shed 1.86 lakh and 1.54 lakh contracts, respectively.

6) Bank Nifty Put Options Data

On the Put side, the maximum Put open interest was seen at the 49,000 strike (with 15.53 lakh contracts), which can act as a key support level for the index. This was followed by the 48,000 strike (13.64 lakh contracts) and the 47,500 strike (11.35 lakh contracts).

The maximum Put writing was observed at the 47,500 strike (which added 3.85 lakh contracts), followed by the 49,000 strike (3.55 lakh contracts) and the 48,500 strike (2.97 lakh contracts). The maximum Put unwinding was seen at the 47,700 strike, which shed 74,340 contracts, followed by the 50,400 and 50,500 strikes which shed 42,960 and 24,030 contracts, respectively.

7) Funds Flow (Rs crore)

8) Put-Call Ratio

The Nifty Put-Call ratio (PCR), which indicates the mood of the market, declined to 0.80 on February 19, against 0.84 in the previous session.

The increasing PCR, or being higher than 0.7 or surpassing 1, means traders are selling more Put options than Call options, which generally indicates the firming up of a bullish sentiment in the market. If the ratio falls below 0.7 or moves towards 0.5, then it indicates selling in Calls is higher than selling in Puts, reflecting a bearish mood in the market.

9) India VIX

The India VIX, the fear factor that measures expected market volatility, fell for another session but still sustained above all key moving averages and remained in the higher zone, keeping the bulls cautious. It was down by 1.56 percent to 15.42 levels.

10) Long Build-up (96 Stocks)

A long build-up was seen in 96 stocks. An increase in open interest (OI) and price indicates a build-up of long positions.

11) Long Unwinding (16 Stocks)

16 stocks saw a decline in open interest (OI) along with a fall in price, indicating long unwinding.

12) Short Build-up (49 Stocks)

49 stocks saw an increase in OI along with a fall in price, indicating a build-up of short positions.

13) Short-Covering (71 Stocks)

71 stocks saw short-covering, meaning a decrease in OI, along with a price increase.

14) High Delivery Trades

Here are the stocks that saw a high share of delivery trades. A high share of delivery reflects investing (as opposed to trading) interest in a stock.

15) Stocks Under F&O Ban

Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit.

Stocks added to F&O ban: Nil

Stocks retained in F&O ban: Manappuram Finance

Stocks removed from F&O ban: Nil